Currency Conversion Advise for E-commerce Websites ~
The Currency Confusion Barrier

Many online merchants have discovered that displaying Australian dollar prices can be a barrier to attracting international sales.

The problem stems from the fact that international online consumers are often unfamiliar with the value of the Australian dollar and therefore are not able to gauge the cost effectiveness of Australian products. This currency confusion can ultimately lead to lost sales.

With 46% of online SMEs now selling products internationally through the internet (according to the 2003 Yellow Pages Business Index E-business Report), this currency dilemma is becoming increasingly significant.

Ways to overcome currency confusion

There are several options available to online merchants that can help to overcome currency confusion.

The options include:

1. Displaying internet product prices in Australian dollars, processing payments in Australian dollars and linking to a pop-up currency converter.

2. Displaying internet product prices in international currencies using inline currency converters and processing payments in Australian dollars.

3. Displaying internet product prices in international currencies and charging in international currencies.

The primary difference between these alternatives is that the first and second options offer an indicative price display in the relevant international currency whereas option three also allows customers to make payments in international currencies.

Option One - Pop-up converters
This technique is commonly known as the pop-up currency converter.

These price converters are incorporated into a web site by inserting a hyperlink to a third party site where the visitor can manually calculate currency conversions.

These currency calculations normally involve a 5-6 click process for each product price.

This method offers some benefits though the 5-6 click process often leads to customer frustration. The pop-up converters are generally considered to be less effective than the other alternatives.

Option Two - Inline currency converters
It is now possible to automatically display product prices in international currencies on your web pages. These services are called real-time inline currency converters. (Inline means the converted price appears next to the Australian dollar price).

There are several shopping cart software packages that offer inline currency displays and there are also stand-alone software tools available.

The JAZconvert e-commerce currency conversion service that was developed by e-JAZ is a example of a stand-alone currency conversion software tool. That particular service works by detecting where each web site visitor is viewing the site from, and then automatically displaying prices in the visitor’s home currency. For example, a person in London viewing an Australian web site would automatically see all of the product prices in GB Pounds, next to the Australian dollar price.

JAZconvert automatic currency converter and products like it can be used with almost all web sites by adding a few lines of code to the product pages.

This option is becoming increasingly popular. The benefit of inline real-time currency conversion is that the conversion is automatic, meaning that the customer does not need to perform any actions or clicks to see prices in their own currency. This allows customers to very quickly gauge the cost effectiveness of products in their own currency and focus on making a purchasing decision.

With these types of currency conversion display services, merchants can still charge for products in Australian dollars if they wish.

Option Three - Accepting multi-currency payments
Option three combines two components, accepting international currency payments and displaying international currency prices.

To achieve the converted price display, either an inline currency converter is used or the multi-currency payment gateway used may offer its own shopping cart or price display system.

In deciding whether you should accept multiple currency payments you should consider these questions:

• Which countries do you sell to?
• What proportion of your total sales are international?
• Do you realistically anticipate future international sales volume to be significant?
• Do you anticipate that accepting international currency payments will offer enhanced benefits and increase sales over and above just the display of international prices using an inline or pop-up converter?

If you decide that your international volume warrants accepting international currencies and see benefit in accepting international currencies you will need to consider the pre-requisites and the fees associated with accepting multi-currency payments.

There are multi-currency payment gateways available that will actually process international payments for merchants. Those payments can then be withdrawn to your Australian bank account.

A benefit of these services include that the merchants do not need to establish a merchant bank account in overseas countries.

There are several multi-currency payment gateways available. Some of the better-known providers include PayPal, WorldPay and the National Australia Bank.

PayPal, is an internet payment facilitator that allows merchants to receive and accept payments in six currencies. PayPal now accepts Australian Dollar payments.

PayPal boasts over 40 million PayPal accounts in 38 countries and is a well-known company with an established reputation.

Worldpay, an internationally based company is another example. Worldpay is also a well-recognised company and allows merchants to accept payments in 11 currencies including Australian Dollars.

The National Australia Bank offer the Multi Currency Acquiring service, that allows merchants to process credit card transactions in one of seven currencies.

Possibly the primary constraint of using multi-currency payments gateways are the associated merchant fees.

As a very general guideline the multi-currency payment gateway service charges will start at around 3.5-5% per transaction. Then depending on the service provider there may also be transaction fees, setup fees, yearly fees and withdrawal fees.

With such high fees you must ensure that your profit margin adequately covers the additional costs of this type of service.

When deciding which option is best you should also consider how the system will integrate with your web site and whether you will need to obtain a new web site shopping cart.

In conclusion, you need to weigh the advantages and disadvantages as they apply to your business.

Do not assume that you must accept international currency payments. It is generally best to only consider using multi-currency payment gateways if you attract a considerable volume of international orders.

Inline or pop-up converters can be easily implemented into almost all web sites and should be adopted by all businesses that possess international appeal.

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Sharon Wild
Strategy & Marketing Director of e-JAZ, Sharon has been involved in the e-commerce community for several years. She successfully manages Australia's largest online jewellery store, Gillett's Jewellers.

Sharon can be contacted via email on sharon@e-jaz.com.au